Oct. 10 (Bloomberg) -- OAO Severstal, Russia's largest steelmaker, will slash output in Russia, the U.S. and Europe by as much as 30 percent this month and review full-year forecasts as financial turmoil saps the world's demand for metals.

Production will be cut 30 percent in the U.S. and Italy, and 25 percent in Severstal's home town of Cherepovets in Russia, the company said in a statement today.

Steelmakers from China and South Korea to Austria and Russia are curbing output as demand for cars and buildings weakens, and as banks withdraw funding for new plants. OAO Magnitogorsk Iron & Steel, Russia's third-largest producer, Posco, Asia's biggest stainless steel maker, and Voestalpine AG, Austria's top steel company, all signaled cuts in production plans this week.

Severstal fell as much as 14 percent to $5.26 per global depository receipt in London trading, before paring losses to trade at $5.80 by 11:45 a.m. local time. The company has declined 73 percent this year on the Micex exchange in Moscow, valuing it at 154 billion rubles ($5.9 billion). Russia's market regulator delayed the opening of trading on the Micex today.

``Makers will have to cut steel output in Russia by about 25 to 30 percent through the end of the year at the very least,'' Uralsib Financial Corp. analyst Dmitry Smolin said by phone. Prices for long-steel, used in construction, may extend a 30 percent slump so far this month, he said.

Reviewing Forecasts

Severstal said it will review the full-year guidance it released at the time of the company's first-half earnings and ``update the market in due course.''

The steelmaker said Sept. 4 that output would rise 31 percent to 23 million metric tons this year, with full-year earnings before interest, taxes, depreciation and amortization of $5.8 billion to $6.1 billion. Ebitda was $3.68 billion in 2007.

Severstal's North American unit, which had an Ebitda margin of 7 percent in the second quarter, will probably be unprofitable after the production cuts, Smolin said.

``We consider these measures to be prudent management in a time of rapidly changing market conditions,'' Chief Financial Officer Sergei Kuznetsov said in the statement today.

Olga Antonova, a spokeswoman for the company, declined to comment on whether layoffs are planned.

``We are working closely with the appropriate labor union representatives,'' she said. ``We expect to provide more details of workforce figures at a later date.''

Fire Staff

Magnitogorsk this week said it planned to cut October steel output by at least 15 percent, adding that it may fire staff or put some on unpaid leave. More than 1,000 steel workers have been switched to construction and cleaning tasks, the company said today. Evraz Group SA, the nation's second-biggest steelmaker, said it's ``optimizing plans'' in Russia.

Steel mills in China, the world's biggest producers, are cutting demand for iron ore and asking miners to postpone deliveries because of slower sales and a lack of credit, Mt. Gibson Iron Ltd., an Australian producer, said yesterday.

Goldman Sachs Group Inc. yesterday cut its 2009 steel price forecast 29 percent. Global export prices for hot-rolled coil steel, a benchmark, have declined 19 percent since July, according to Metal Bulletin data on Bloomberg.

To contact the reporter on this story: Maria Kolesnikova in Moscow at mkolesnikova@bloomberg.net.

Last Updated: October 10, 2008 06:51 EDT